Challenger Banks Europe Fintech Weekend Read

European Challenger Banks Tailor Services to Country-Specific Cultures

Challenger banks are thriving across Europe, from the UK to Spain, and Lithuania to Turkey. Yet Europe is a patchwork of countries, varying in cultures and the demographic makeup of their populations.

This means that while some facets of challengers are similar across European markets (like offering customers easy money management options, lower rates for foreign exchange and loans than traditional banks and zippy, slick money transfer functions) there are often fundamental differences.

This is because each challenger bank is tailoring its offering to its customer base, meaning that services, like stock trading services or crypto services, may fly in one country and not another, depending on the needs of the population of that country.

Here, The Fintech Times offers an overview of a handful of European countries- Lithuania, Belgium and Turkey- and looks at how the challenger banks are tailoring their banking services to meet the demands of the respective populations.


Belgium has a reputation as being a nation of savers and this is borne out by OECD data: its population’s propensity for savings saw it top the European charts for household savings at the turn of the century.

According to the National Bank of Belgium, as of February 2021, there was €280 billion (£243billion) in savings accounts in the country.

The yearning for savings by Belgians increased during the pandemic, as restricted spending opportunities and uncertainty about the financial climate meant that savings represented as much as 27 per cent of disposable incomes.

Furthermore, industry figures show that during the pandemic, just two per cent of the country’s population was not saving, compared to eight per cent before the pandemic.

One challenger bank which has benefited in customer sign-ups during the pandemic is the subscription-only, AI-powered digital bank Aion Bank, which launched in Belgium last year. 

Backed by private equity firm Warburg Pincus, which has invested in other neobanks including Silicon Valley-based Varo, Aion charges a subscription fee for regular membership instead of various individual fees charged by other banks.

One of its key selling points is offering attractive savings rates to Belgians, tapping into the national desire for savings.

As a spokesperson for Aion points out the bank has been designed “to help our members save and earn more money” and help meet the demand from a “nation of savers”.

The spokesperson says the bank does this in several ways.

“We offer one of the highest interest rates for savings accounts in Belgium. Our Extended Regulated Savings Account currently offers a fidelity premium of 0.90 per cent combined with a base rate of 0.10 per cent,” the spokesperson said.

Also, it offers a product called MoneyMax, which it says is designed to scour the market for the best interest rates on deposits and if a better rate if found it will match it.


In Turkey, over 30 per cent of the country’s adult population is unbanked, according to industry figures, while nearly a third of Turkey’s population are more likely to use cash than alternative means to make payments.

The millions of unbanked represents an alluring prospect for challenger banks in Turkey.

Challengers in Turkey are also enticed by Turkey having a young (around half its population is under 30), tech-savvy population which is open to adopting modern payment methods and new technology.

One fintech trying to make waves in Turkey is Papara, which offers free, multi-currency transfers to consumers and also a one-stop shop for paying bills, digital trading currencies and tracking spending habits.

It launched in Turkey in 2016 and now has a customer base of nearly 8.5 million, its founder says, with more than 70 per cent of its user aged between 18 and 35.

To date, the bank says it has attracted more than four million unbanked of Turkey’s population but is unlikely to be targeting more of this demographic.

Ahmed Karsli, the founder, said: “Most underbanked or unbanked users when you onboard them spend less money than bank users because of their salary and household income.”

Instead, he said the bank is to continue to prioritise its younger customer base.

“We are quite happy with youngsters. The most difficult part of creating a challenger bank is the customer education process and it is quite easier to integrate younger people when you are building a technology product,” he adds.

On taking on traditional banks in Turkey, Karsli said traditional banks have recently upped their games.

“Many traditional banks in Turkey are also creating small challenger bank apps or digital wallets so that they can compete with Papara and other players,” he said.

He says that during the pandemic, Papara was able to hoover up new sign-ups as traditional banks were prevented from signing up new accounts because of lockdown constraints.

Karsli said the bank was signing up over 25,000 customers a day during the pandemic, compared to 5,000 a day beforehand.

Soner Canko, a member of Fintech Istanbul Advisory Board and former CEO of Interbank Card Center, said challenger banks in Turkey have a big opportunity for two key reasons- one is the millions of unbanked and secondly the limited number of national traditional banks.

“Definitely, they will be a success,” he says.

“The number of players is limited and it’s going to increase the competition. But that doesn’t mean it is easy to make money from the Turkish market. Because the traditional banks will react accordingly.”

Canko points out that in Turkey financial institutions like BNP Paribas have their own digital banks, which act like challenger brands, not only competing with rival banks but also posing competition to their mother brands.


Home to Revolut, Lithuania is a European fintech hotspot with over 200 fintechs.

Experts say young Lithuanians are keen to experiment with new technology and apps, meaning it’s a fruitful hunting ground for fintechs.

Rugilė Stonytė, senior investment advisor, technology, Invest Lithuania, said: “Older generations probably stay with the traditional commercial banks while the younger generation is keener to try out new products.”

Lithuanians are keen to try out new offerings from overseas challengers like N26 and Monese while young Lithuanians are keen to experiment with stock trading, like that offered by Revolut.

One Lithuanian challenger, which was licenced by the European Central Bank in 2018, thinks Lithuanians want a full gamut of services.

“Unlike most other challenger banks, we offer a full spectrum of banking services, from cross-border payments and currency conversion to loans and deposits for both private and business customers,” said Povilas Sadaunykas, CEO of

Financial inclusion, ease of use, transparency, and top-notch cybersecurity – that’s how we see today’s banking.”

But many challenger banks in Lithuania are focused on B2B offering and serving the SME market, which feels undervalued by traditional banks, say experts.

Last year, the Bank of Lithuania released a digital, blockchain-based collector coin dedicated to the country’s Act of Independence of 1918.

Claiming a world first, the central bank believes the collector coin is both a national symbol and a signal of the bank’s strategy of driving innovation in the field of finance and payments.

Marius Jurgilas, a member of the board of the Bank of Lithuania, said: “Digital money is inevitable in the digital economy. Today, LBCOIN is what allows people in Lithuania and around the globe to test new technologies in a safe environment.”

However, experts have questioned how popular crypto is in Lithuania.


Additional reporting: Benedict Smith


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